The Australian subsidiary of French nuclear giant Areva NC will seek to intervene in legal action brought by Summit Resources Ltd against Subiaco-based Paladin Resources Ltd, which the companies announced they would drop on Friday.
The Australian subsidiary of French nuclear giant Areva NC will seek to intervene in legal action brought by Summit Resources Ltd against Subiaco-based Paladin Resources Ltd, which the companies announced they would drop on Friday.
In a Summit announcement, the company says it has been informed that Areva will apply to the Supreme Court of Western Australia for orders under section 237 of the Corporations Act to be granted leave to intervene in the proceedings, and in the meantime would seek to restrain the companies from giving effect to their agreement to settle. The company's application will be heard today.
The case surrounded the alleged disclosure of information by Resolute Mining Ltd and Valhalla Uranium Ltd to Paladin ahead of its takeover of the Valhalla subsidiary Mt Isa Uranium Ltd, which held a stake in the Isa Uranium Joint Venture Agreement, along with a Summit subsidiary.
The JV, which mines the Valhalla/Skal deposit in Mt Isa, is now held 50-50 by Paladin and Summit.
Summit had earlier claimed that an existing condition of the JV gave one partner the option to fully acquire the project should the other pull out, and sought to use this condition to fully acquire the project at Paladin's expense.
Summit, which is now more than 80 per cent owned by Paladin, announced on Friday that it would drop the action, saying that after discovery the prospects of success had not improved, among other reasons.
Areva, which holds 10 per cent of Summit, had earlier entered into a strategic alliance with Summit entitling it to marketing rights over two thirds of the company's Australian uranium production, subject to shareholder approval.
Areva chose not to accept Summit's subsequent decision not to seek shareholder approval after recommending Paladin's takeover offer, appealing to the Takeovers Panel.
Areva's application related to Paladin's assertions that it would vote its shares in favour of the marketing rights arrangement, and subsequent decision not to do so.
Unfortunately for Areva, while the Panel decided that Paladin's actions could be classed as "unacceptable circumstances," it decided that there were no orders it could implement that would rectify them appropriately.
The full text of a Summit announcement is pasted below
On 3 August 2007, Summit Resources Limited ("Summit") announced that Summit Resources (Aust) Pty Ltd had agreed with Resolute Limited and Mt Isa Uranium Pty Ltd ("Defendants") to settle the Supreme Court proceedings ("Proceedings") commenced by Summit Resources (Aust) Pty Ltd.
Subsequently, Areva NC ( Australia) Pty Ltd (a wholly owned subsidiary of French company, Areva NC) has advised that it intends to apply to the Supreme Court of Western Australia for orders under section 237 of the Corporations Act to be granted leave to intervene in the Proceedings.
In the meantime Areva will seek to restrain Summit and the Defendants from giving effect to the agreement to settle the Proceedings. Areva's application will first be heard on 6 August 2007 in the Supreme Court.
Areva has also sought access under section 247A of the Corporations Act to Summit's records (including legal advices) in connection with the Proceedings.
Background to Areva's involvement In early April 2007,
Areva and Summit entered into a strategic alliance whereby Areva would subscribe for shares in Summit. If Areva completed the subscription, it would be entitled to marketing rights over two thirds of Summit's uranium production from its Australian projects. However, the share placement to Areva was conditional upon shareholder approval. On 16 April, the directors' of Summit recommended acceptance of Paladin's revised takeover offer. Summit subsequently announced that shareholder approval would not be sought. The directors concluded that it was pointless that a meeting of shareholders be held to consider the transaction, as Paladin had advised that it would vote against the resolution.
Soon after, Areva notified that it had acquired 10.46% of the shares in Summit. Areva did not accept that a shareholders' meeting was not called and unsuccessfully took proceedings in the Takeovers Panel to force a meeting of shareholders and force Paladin to vote in favour of the share placement. At the close of the offer, Paladin held 81.82% of Summit's shares.
Areva has retained its shares.Areva acquired its shareholding for approximately $126 million at an average price of $6.10 a share. At the last close of market, Summit's shares were trading at $3.16. No Areva representative sits on the board of Summit. It is conceivable that Areva might be less than satisfied with this outcome but this is not as a consequence of anything that Summit has done.
Areva Group
The Areva Group is a large vertically integrated nuclear enterprise. According to its 2006 Reference
document, together the French State and its agencies or controlled entities hold 97.4% of the voting rights of the parent corporation. It had sales in the order of 10.9 billion (AUD17.525 billion) and net income of 649 million (AUD1.043 billion). It has operations around the world and employs approximately 61,000 people.
In its application to inspect the records of Summit to review the litigation proceedings, Areva listed the parties that should be given access to the documentation. On this preliminary application, that list included four Counsel (including a Queens Counsel and a Senior Counsel) and nine solicitors.
Latest Proceedings
To be successful in its latest legal proceedings, Areva has to establish that it is acting in good faith and that the decision to settle the Proceedings was not in the interests of Summit.
Further announcements will be made as appropriate when Summit has information about the timetable for the Supreme Court to deal with Areva's applications.
